What do you do with a problem like cement? Around 2bn tonnes are used every year, each tonne a source of 0.4 tonnes of carbon dioxide as it is made. The cement industry is responsible for 5% of the world's carbon emissions – more than the entire aviation industry.

Standard, or Portland, cement is made by heating limestone or clay to around 1,500C. This use of energy and the decomposition of the limestone as it cooks releases copious amounts of CO2. As the carbon reduction targets from global climate agreements begin to bite, sorting out cement will become a priority.

Engineers have been working hard on the problem in recent years, with a range of approaches to cutting the environmental impact of the construction industry: some have tried synthetic polymers that would remove the need for limestone; others have fiddled with how cement is used in buildings. The latest on the block is Liquid Granite, a binding material that, according to its inventor, could almost entirely replace cement with a powder made from recycled waste materials.

Liquid Granite replaces the need for more than two-thirds of this Portland cement when making concrete, thereby saving the associated carbon emissions. "One of the biggest culprits of carbon footprint is cement, which we use in making concrete – Liquid Granite does away with most of the use of cement. The amount used is pretty small," says Prof Pal Mangat of Sheffield Hallam University, who came up with the product. "Potentially, by the time we're finished with this developmental technology, it'll be close to zero."

Mangat is cagey about the exact formulation of Liquid Granite, and with good reason: by 2020, the French bank Credit Agricole estimates, demand for cement will be 50% greater than today, and a new carbon-free building material could reap huge rewards. All that Mangat will say is that Liquid Granite is made from an inorganic powder, 30-70% of which is recycled industrial waste materials. Using the same aggregates as normal concrete, it could be used anywhere cement is but with a fraction of the carbon footprint.

"In some applications it's more suitable than concrete. For example, one of the main areas we are currently exploiting it is fire-resistant building materials," he says. "It has good fire-resistant properties, unlike concrete, which explodes upon exposure to high temperatures."

There has already been interest from the building industry, with Liquid Granite has already been used in fire-rated lintels at the Olympic Village and Stratford Shopping Centre in east London.

Others are hot on Mangat's heels. Novacem, based in London, last year created a cement that has a negative carbon footprint over its lifetime. His invention uses magnesium silicates, which emit no CO2 when heated, and the processing is carried out at a much lower temperature than that required for Portland cement. In addition, the cement absorbs CO2 as it hardens – each tonne could remove around 0.6 tonnes of the greenhouse gas over its lifetime.

Transforming a global industry as established as construction was never going to be simple. But tackling the problem of cement seems a good place to start.